Dinar Doubts Multiply

John Wasik
, ContributorOpinions expressed by Forbes Contributors are their own.

1 million iraqi dinar (Photo credit: mandiberg)

Most of the time, I like to write about a flim-flam once and move on. There are so many of them and so little time.

But when two completely unsolicited, independent sources come from opposite ends of the country to tell me something, I tend to revisit the matter. Hence this second post on Iraqi dinars.

Dinars are the currency of Iraq, which, as you know from the news, is embroiled in a low-grade civil war of sorts. American troops have mostly left and the government is trying to sort out the mess. There's been an unfortunate amount of bloodshed and several factions that were oppressed under the late Saddam Hussein are at each others throats.

Somehow the word got out that Iraqi dinars would be worth a lot more in the future than they are now. It's impossible to value them since they are not traded on any legitimate foreign exchange and major banks don't buy or sell them openly. Yet that hasn't stopped hundreds of operators from selling Iraqi notes in the U.S., promoting the currency as a get-rich-quick route when -- and if -- the Baghdad government gets its act together and revalues them.

So an untold number of would-be investors have bought dinars, which are heavily marketed by internet sites. Are the notes legitimate or counterfeit? What's their true value? Will the Iraqis dump the currency or hyper-inflate? No one knows for sure.

The only thing we know is that lots of dinars are being sold. Anyone can print money. It's what it's exchanged for relative to another currency that counts.

So when my first post on dinars ran last month, I got some flame mail. Then I started to hear from people whom I trust.

Here's Barry Kaplan, a respected fee-only financial planner with Cambridge Southern in the Atlanta area, who talked to a local bank (which wished to remain anonymous) and heard this:

"This bank is getting calls every week from people who want to open accounts at their bank [which doesn't buy dinars]. They even confided in me that two widowed clients have paid dealers $10,000 each and are waiting for their dinars to arrive so they can convert them to $1 million. They get calls every week. Yesterday alone, they got three calls. The callers want to open accounts with zero balances waiting for millions to come in. The bank is no longer opening zero-balance accounts; they got tired of doing it over and over. They now tell these people that this dinar conversion probably won’t work, but they will be glad to open an account for them if and when they get the money. To date, none of these zero-balance accounts that they opened in the past have been funded. The bankers think that these people have paid up to six figures for the dinars (but they have no proof). This is because some of these people are calling expecting not just millions, but tens of millions."